BIPPS’ pension testimony: It’s the benefit structure that’s the problem

BIPRT TESTIFIES @ MARCH PPOB MEETINGThe Bluegrass Institute Pension Reform Team offered its presentation “Sound Solutions for Kentucky’s Pension Crisis” at a recent meeting of the state’s Public Pension Oversight Board.

Dr.  William Smith told board members that addressing Kentucky’s public-retirement crisis is key to understanding and confronting the structural imbalance of the benefits system.

 

Bluegrass Institute Board member Aaron Ammerman, an investment adviser in Lexington, testified that while addressing pension benefits is a difficult topic fraught with emotion, it must be done in order to pursue true reform “with real teeth to it.”

He also told board members that while the Bluegrass Institute is not opposed to keeping a defined benefit system for state retirees, the rules for maintaining a properly funded pension system have not been followed in Kentucky like they have in other states.

Ammerman focused on a couple of the most-important rules.

 

The Bluegrass Pension Reform Team will make a presentation on Kentucky’s trouble pension system this Saturday, April 22, at the monthly meeting of Take Back Kentucky. The meeting begins at 1 pm at the Family Buffet restaurant, 121 Towne Drive, in Elizabethtown 42701 (next to the Kroger store near Dixie Highway).

 

Bluegrass Beacon: A Shakespearean take on an Amish farmer’s tragedy

BluegrassBeaconLogoTo try, or not to try, that is the question: 
Whether ‘tis nobler in the mind to suffer  
The slings and arrows of FDA noncompliance

Is this how Shakespeare might have rendered a current version of “Hamlet” were he writing in these days of out-of-control government agencies, including perhaps the most McCarthy-like of them all: the Food and Drug Administration?

In the case of Sam Girod, an Amish farmer in Bath County, the FDA suffered him not – nor the labels on his herb-rendered skin salves, for that matter.

It all started a few years ago when Girod ambitiously claimed in labeling and promotional materials that his ointments concocted with chickweed and bloodroot could cure skin cancers along with less-serious ailments.

Girod agreed to remove “skin cancer” from the label and call the product “Chickweed Healing Salve.”

The FDA wasn’t satisfied.

They now objected to “healing” in its name, so he renamed the ointment “Chickweed Salve.”

But the agency’s regulatory brutes wouldn’t be content until they made an example out of Girod.

The FDA bullied its way to a felony conviction against this simple Amish farmer who’s now staring at a possible 48-year prison sentence when he’s sentenced in June – all for such scary activity as misbranding labels and the fact that his farm was “an establishment not registered with the Food and Drug Administration” and on arbitrary charges of “impeding” a federal investigation.

I doubt Farmer Sam will be contemplating Shakespeare’s writings while finishing out his life behind bars. And it certainly doesn’t seem like the FDA, judge and prosecutors in this case will be feeling the “oppressor’s wrong” or “the insolence of office” anytime soon, as Will might have observed.

In fact, they might even be assembling a new SWAT team to save future Kentuckians from the perils of Amish farmers’ skin salves.

Plenty of avenues exist to resolve these types of cases without such harsh tactics.

Customers could have returned Farmer Sam’s products, boycotted his business or even sued him for financial damages if they believed he defrauded them.

Even the fact that Girod twice relabeled his ointment wasn’t enough to satisfy the zealotry of the FDA and a small-town court obsessed with carrying out its skin-salve witch hunt.

Wouldn’t it have been cheaper for the town just to burn poor Farmer Sam at the stake like in Shakespeare’s day?

“Aye, there’s the rub,” as Will writes in “Hamlet.”

If Sam were forced to “shuffle off his mortal coil,” what political lesson of intimidation would exist to warn other Amish farmers, raw-milk producers, farm-to-table hosts and every producer of natural remedies and herbal cures found on shelves in all sorts of establishments – from the shelves of Walmart to your local holistic grocery store?

Producers of these natural products should all prepare ultimately to feel the slap of the heavy-handed FDA enforcement regime.  

But what happens in a few years after a lifetime of “the thousand natural shocks that flesh is heir to” when the judge, his prosecutors and FDA tyrants along with their enablers – and perhaps even the jurors who took only four hours to condemn an Amish father of 12 – find themselves with an odd spot on their hand that stubbornly persists and won’t go away?

Maybe they’ll be informed by a doctor: “it’s cancer.”

They’ll try chemo; it won’t work.

Maybe they’re given a devastating sentence that the little skin spot could cost them their life.

Now they’d give anything to have access to a 100 percent natural chickweed salve produced by an Amish farmer who by then may have shuffled off his mortal coil and took his recipe – and their right to try it – with him.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Beacon – Tax plans, tax plans: Which is fairest of them all?

BluegrassBeaconLogoGetting rid of an unbalanced reliance on the income tax and moving to an approach that taxes consumption instead would brand Kentucky a state of producers rather than a commonwealth of punishers.

After all, what do personal and corporate income taxes accomplish other than funding government services and programs by punishing – and thus discouraging – individuals from producing and businesses from growing?

A proven free-market principle is: policies get more of what they encourage and less of what is discouraged.

States moving away from income-tax policies to approaches capturing revenue from purchases of products and services have more vibrant economies than their counterparts, most of which demonstrate only economic mediocrity.

Kentucky currently fits into the latter category, according to the Tax Foundation, which claims that 32 other states have a better business tax climate.

A common attribute among states ranking near the top of the foundation’s 2017 Business Tax Climate Index is that they don’t levy one or more of the major taxes: the corporate or individual income tax or the sales tax.

However, even some states holding onto all major taxes – like Indiana and Utah – rank in the index’s top 10 because they have greatly lowered their rates, albeit with broader bases.

North Carolina, meanwhile, moved from No. 41 on the foundation’s 2013 index to No. 11 in the latest ranking by enacting a flat tax with a relatively low 5.5 percent rate.

Any of these approaches is better than the current policy in Kentucky, which could follow these states’ lead or leap even higher by getting rid of income taxes altogether and raising the greatest portion of its revenue via consumers.

To opponents, however, such an approach would be too fair.

Their narrative is that consumer levies, like sales or flat taxes, treat everyone the same: the more you buy, the more tax you pay; the less you purchase, the lower your tax bill.

How, exactly, is that a problem?

Remember: fairness is not the ultimate goal of these defenders of the status quo. In fact, they don’t care for the fairness of a consumption-based tax at all.

Instead, they favor the Robin-Hood approach (apologies to Russell Crowe).

Implementing a policy whereby the commonwealth raises a significant amount of its revenue by taxing spending rather than producing removes the ability of these modern-day Robin Hoods to ambush producers in the rich forests of the Bluegrass State and redistribute their wealth to others.

However, citizens likely will ultimately resist their Bernie-Sanders-Elizabeth-Warren-Hugo-Chavez approach to tax policy when they understand the real benefits to them personally of a consumption-based tax policy:

  • Bigger paychecks.

Abolishing Kentucky’s state income tax would amount to an immediate increase in the size of many paychecks.

  • No more April 15 surprises.

Since all taxes owed would be paid during purchases in this pay-as-you-go system, there would be no complicated forms to file, unexpected bills or audits.

  • A built-in incentive for Kentuckians to save.

An income-tax policy means entire paychecks are taxed, regardless of how much is saved or spent.

Where’s the incentive to save in that approach?

A consumption-based levy taxes only what is actually spent and likely will result in less impulsive and more productive purchases.

Plus, lawmakers could lighten the burden on lower-income residents by opting not to tax food or medicine, which would give frugal shoppers who purchase only the basics the added advantage of paying even less in taxes.

What better ideas do opponents of a consumption-based tax offer for building healthier savings accounts and, with them, a stronger state economy and more independent and prosperous citizenry?

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Vanderbilt study: Merit pay for teachers improves student performance

A new study from Vanderbilt University concludes, as Education Week puts it, that “merit pay for teachers can lead to higher test scores for students.”

Vandy’s study points to an interesting policy idea for merit pay. Click the “Read more” link to learn about that.

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Quote of the Day

Quoteoftheday-300x210
“Experience suggests that traditional district schools, on their own, are probably incapable of adopting the structural and practice changes necessary to prepare the majority of students for the challenges of an uncertain future. The state must provide the authority and resources to motivate and help districts adopt successful innovative practices developed by pioneering charter and district schools.”

Ron Wolk, Founding Editor of Education Week, March 1, 2017

Bluegrass Beacon: KERA architect spreads fake news about education climb

BluegrassBeaconLogoDavid Hornbeck, an architect of the Kentucky Education Reform Act (KERA) who describes himself as a “consultant to the Kentucky legislature, 1989-1990,” claims in a recent op-ed opposing charter schools: “Kentucky’s children have made more progress than those of any other state in the nation.”

For such a claim to hold up under scrutiny of the evidence – something Hornbeck fails to provide even in the least amount to support his sunshiny analysis – it must totally disregard what happened to Kentucky’s black students, the commonwealth’s largest racial minority, after KERA came along.

Only four of the 28 states with the National Assessment of Educational Progress (NAEP) eighth-grade math data needed to compare progress among black students from 1990 – the earliest available – to 2015 improved less than Kentucky’s blacks.

Meanwhile, other southern states like North Carolina, Louisiana, Georgia and Arkansas matched or exceeded the national-average increase in black students’ math scores between 1990 and 2015.

Can it just be coincidence that each of those states has for years allowed primarily minority, low-income parents the opportunity to choose what’s often a better educational alternative for their children: charter schools?

It’s also not likely coincidental that Kentucky by not allowing its parents that same option of enrolling their children in charter schools never came close to any of these states in terms of academic improvement.

The General Assembly has now made that option available with passage of charter-school legislation during the waning days of this year’s legislative session.

Neither is it happenstance that KERA’s most ardent defenders –  including teachers-union representatives and longtime members of the education establishment – provide the most zealous opposition to school choice and feverishly hope the charter-school movement fails in the Bluegrass State.

At the very least, Hornbeck’s claim of “more progress” made by Kentucky’s children than in “any other state” shatters once you realize the commonwealth’s eighth-grade blacks improved by only one paltry point on NAEP reading scores between 1998 and 2015.

Is Hornbeck unaware of the performance of black students in Tennessee, which ranks fourth nationally for its increase in eighth-grade reading scores during that same 17-year period?

Might this be a good place to mention that Volunteer State parents have had the option of charter schools during all but four years of that 17-year period?

Travel further south to Florida, which offers a multitude of school-choice options in addition to charter schools – including vouchers, tax-credit scholarships and open-enrollment choices – and there you will find a state where black students, who trailed their fellow blacks in Kentucky by 10 points in 1998, are now four points ahead of their black peers in the Bluegrass State.

Hornbeck’s claim that Kentucky is a nation-beater doesn’t even hold up among Kentucky’s white students.

Whites comprise 80 percent of the commonwealth’s public-school population but only statistically significantly outscored their fellow whites in just two other states in eighth-grade math scores in 2015.

House Bill 940, which passed in 1990 and is better known as KERA, declares in Section 3: “Schools shall expect a high level of achievement from all students.”

Did Hornbeck, operating in his “consultant” role, get paid to write that sentence?

If so, doesn’t he owe taxpayers a refund considering the lack of progress among our neediest students since KERA became law 27 years ago?

These are the very children who most need charter schools and are the primary reason why House Bill 520 – which finally opens the doors to charters in Kentucky – made it through this year’s legislature.

Disadvantaged kids also are the reason why we must make sure local boards of education, which HB 520 designates as sole authorizers in 171 of Kentucky’s 173 school districts, give charter-school applicants a fair shot – something too many of these students haven’t found in our commonwealth’s KERA-based, one-size-fits-all public education system.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read his weekly Bluegrass Beacon column at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Beacon: Control costs, make health care great again

BluegrassBeaconLogoThe latest RINO to lose is the Repeal In Name Only health-care bill – also known officially as the American Health Care Act (AHCA) – meant to replace the Affordable Care Act (ACA).

To paraphrase Kentucky Sen. Rand Paul, what’s the point in replacing a program that subsidizes, taxes, punishes and practices conniving cronyism with a policy that promises a “refundable tax credit” (subsidizes), financially castigates those with good insurance (taxes), forces individuals who allow their coverage to drop to pay 30 percent more to insurance companies just to get reinstated (punishes) and props up insurance companies with $100 million of “reinsurance” funding (conniving cronyism)?

Nothing offered by Washington in either of these approaches effectively addresses the primary culprit in the current health-care fiasco: cost.

Forcing insurers, for example, to cover an array of 10 “essential health benefits” – from maternity care to mental health and drug abuse – greatly drives up the cost of premiums for everyone.

Why, for example, is a 65-year-old man forced to purchase a health-insurance plan that includes maternity coverage?

Such mandates drive up the cost of his plan, and, depending on his financial status, may require a taxpayer-provided handout to help him afford the premium, making him dependent on government to pay for his insurance that includes coverage for services he neither wants nor needs.

If we’re going to include government subsidies in our health-insurance policy, why don’t we at least do it in a way that actually helps some folks truly in need without penalizing everyone else?

Supporters fear getting rid of Obamacare would result in really sick people with longstanding illnesses being left without access to adequate coverage.

It doesn’t have to be that way if privately run high-risk pools are allowed as part of any “replacement” agreement.

Just like swimmers “share” the pool’s water, so participants with preexisting health conditions divvy up coverage costs.

Since participants in such a plan offer a much higher risk of filing claims and using health-care services, premiums will be higher than those of healthy consumers in the individual market.

Government can intervene in a limited manner by providing subsidies to people in these pools that help bridge the gap between lower incomes and higher premiums.

Taking this approach reveals a stark contrast between a safety-net program and sledgehammer-to-an-ant approach that happens when government tries to run the entire health-care system.

It’s the distinction between offering food stamps to low-income individuals to purchase their groceries versus government running the grocery stores.

Witness the disaster known as “Section 8 housing” and understand: there’s a considerable difference between government offering housing vouchers to assist lower-income citizens in finding a place in the private marketplace to rent and the demonstrated public-housing debacle found in cities in the commonwealth and across the nation.

Such a policy would help folks with preexisting conditions engage in their own care as they shop to find a plan that works best for them – the process of which will expose them to what their coverage truly costs and the care they can expect to receive.

Neither the ACA nor the ACHA does much of anything to engage individuals – with or without preexisting conditions – in their own care, especially when it comes to knowing the cost of products like prescription drugs or services such as surgeries.

The combination of consumers not knowing anything about the price tag of their care while government mandates products and services insurers must provide and then turns around and subsidizes them offers little incentive to providers to control costs – the primary obstacle to making America’s health-care system great again.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Charter School Stories: They please folks in North Carolina

Even though a Kentucky charter school law is now on the books, we continue to hear vehement attacks from opponents. The State Journal reported on April 4, 2017 in “Kentucky lawmakers say negative impacts of session will be felt across the state” that one opponent, Kentucky Representative James Kay, D-Versailles, believes “the impact of charter schools will be devastating.”

Apparently, folks who actually have their children in some of North Carolina’s charter schools don’t agree, as you can hear in this very short You Tube.

Charter School Stories: They DO help kids with disabilities

Even though a Kentucky charter school law is now on the books, we continue to hear vehement attacks from opponents like Kentucky Representative Derrick Graham, D-Frankfort. The State Journal reported on April 4, 2017 in “Kentucky lawmakers say negative impacts of session will be felt across the state” that Graham agreed another legislator’s assertion that “the impact of charter schools will be devastating.”

Though not specifically mentioned in the State Journal article, one thing charter opponents frequently claim is that these public schools of choice don’t help kids with disabilities.

That assertion would be a real surprise to Carmen Ward, whose son Paul has benefitted greatly from his attendance at a KIPP charter school in Missouri. But, I’ll let You Tube help tell you this story about how a student with Asperger’s didn’t get the support he needed until he entered a charter school.

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Valley High School exits Priority Status????

Last week the media in Louisville trumpeted the announcement that Kentucky Commissioner of Education Stephen Pruitt had declared the Valley High School in the Jefferson County Public School District was no longer in Priority School Status (see WDRB’s coverage here).

That sounded interesting, so I decided to take a quick look at the latest performance in this school for math and reading testing. I looked at math and reading because performing in the lowest five percent of all schools for these two subjects was supposed to be the primary cause to enter Priority Status back in 2010 when these low performing schools, which originally were called “Persistently Low-Achieving Schools,” first started to be identified.

Well, my quick look turned up a puzzle.

This first table shows the lowest 20 performing standard (Class A1) high schools on KPREP End-of-Course testing in Algebra II and English II. These two KPREP tests are used to gauge reading and math for federal reporting purposes. The table shows the combined percentage of students who were rated either Proficient or Distinguished in Algebra II in the first data column and then lists the combined percentage of Proficient and Distinguished students in English II in the middle data column. The next column, on which the table is ranked, shows the average of these two percentages.

Table 1

Valley High KPREP Math-Reading Combined Ranking 2016

As you can see, Valley High School ranked in the bottom five percent of all high schools in Kentucky that had data reported, ranking at 218 out of 227 reporting high schools.

But, the original testing that got Valley High in trouble (it was named a Persistently Low-Achieving School in the spring of 2010) was the now defunct CATS Kentucky Core Content Tests. Since those tests don’t even exist in 2016, I decided to give Valley another chance by looking at its performance on math and reading in the 2016 ACT testing of Kentucky’s 11th grade students. Table 2 shows how that turned out.

The first data column in Table 2 shows the percentage of students in each school that reached or exceeded the Benchmark Score set by the Kentucky Council on Postsecondary Education (CPE) for ACT testing that indicates students will not have to take remedial courses in math. The next column shows the percentage of students that met the CPE’s ACT Benchmark for reading, which also avoids a requirement for college remediation in that area. The two Benchmark percentages are then averaged together in the next column and the table is ranked on this combined average column.

Table 2

Valley High ACT Math-Reading Combined Ranking 2016

Incredibly, if we look at the average of the percentages of students meeting the CPE’s College Readiness Benchmark Scores for the ACT, Valley High ranks even lower than on KPREP!

So, this is a real puzzle. I know the actual method used to determine Priority Status uses a more complex approach than just looking at a single year of data, but when we see Valley High’s latest performance in both Tables 1 and 2, something just doesn’t feel right.

Should Valley High be off the hook?

In any event, based on its latest year’s performances on both KPREP and ACT math and reading, Valley High remains a very low-performing school. I think the public deserves to know that even if our educators are letting Valley off the hook.

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